12,400-MILE FIBER-OPTIC CABLE LINKS GUAM, ASIA

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Service to begin in July or August

By Stella f. Arnaldo

Philippines Correspondent

MAKATI CITY, Philippines (Marianas Business Journal, June 22, 2009) –The completion of the widely-anticipated $550-million Asia-America Gateway fiber-optic cable project is expected to boost Guam's telecommunications services with Asia, North America and the rest of the world.

According to a filing by the Philippines' telecommunications giant Philippine Long Distance Telephone Co. with the government-run National Telecommunications Commission dated May 29, the 20,000-kilometer (12,400-mile) AAG fiber-optic cable network is scheduled to begin commercial operations by July or August.

PLDT is a member of the consortium that is constructing the fiber-optic cable facility that has been billed as the "first direct link" between Asia and the United States. It will connect Malaysia, Singapore, Thailand, Brunei Darussalam, Vietnam, Hong Kong, the Philippines, Guam, Hawaii and the U.S. West Coast. Of the $550-million cost of the project, PLDT has contributed $50 million for the Philippine leg of the network. Other Philippine members of the 17-member consortium are Bayan Telecommunications Inc. and Eastern Telecommunications Philippines Inc.

AT&T Corp., which will handle the U.S, Guam, and Hawaii legs of the cable network, said in February that it would be investing about $1 billion this year to roll out its global network. The company gave no details on how much it was allocating for the AAG project. The company currently has interests in 83 undersea cable systems, covering 488,000 route miles. In total, AT&T's network has more than 888,000 route miles of fiber.

According to the consortium's application for a submarine cable license with the U.S. Federal Communications Commission in October 2007, "the AAG will have 10 landing stations, one each in seven foreign countries (Malaysia, Singapore, Brunei Darussalam, Thailand, Vietnam, Hong Kong and the Philippines) and three locations in the United States and its territories (Guam, Hawaii, and the mainland United States)." AT&T owns the landing stations in the mainland U.S. (San Luis Obispo, Calif.) and Hawaii (Keawaula), and AT&T Transoceanic Communications LLC, a wholly-owned and controlled subsidiary of AT&T, owns the Guam landing station.

The same filing stated "that capacity will not be sold indifferently to the user public, but will be used by consortium members and offered to other carriers on terms tailored to their particular needs."

Completion of the AAG is expected to "revolutionize high bandwidth delivery between Asia and the U.S. Designed for broadband traffic, it will provide much-needed diversity in traditional routes to the U.S. and ensure alternate routes, expanded capacity and high levels of service during potential disasters," according to the project's Web site.

Despite the island's size, Guam has about six private mobile phone and Internet providers - Docomo Pacific (formerly Hafatel and Guamcell), IT&E (purchased by Sumitomo-backed PTI/Verizon), MCV Broadband, iConnect, Pacific Data Systems and GTA Teleguam, (formerly the government-owned provider of the island's basic phone network).

Because of its strategic location, Guam is a telecommunications trans-Pacific hub for American telcos like Sprint, Verizon and AT&T, linking the U.S. and Asia via undersea fiber cables.

In December 2006, a series of powerful earthquakes off the coast of Taiwan damaged a number of undersea cables and disrupted Asia's voice and data communications within the region and the rest of the world. Knocked out were parts of the SeaMeWe 3 (South East Asia Middle East Western Europe 3) and APCN2 (Asia Pacific Cable Network 2) undersea cables, both main East Asia telecommunications arteries in the region. Much of Asia lies in a volcanic and earthquake-prone area called the "Pacific ring of fire." The AAG project bypasses the most seismically volatile areas.

According to Internet World Stats, an online depository of data on global Internet usage, as of March, world usage of the Internet expanded by 342.2% from 2000 to 2008, with Asians comprising the largest group at 41.2% of usage. Users' growth among Asians was up 474.9% from 2000 to 2008, coming in fourth after smaller regions like the Middle East (up 1,296.2%), Africa (1,100%), and Latin America/Caribbean (860.9%).

In Guam, with an estimated population of 175,991, Internet usage comprises 37% of the population, and recorded a 1,200% users' growth from 2000 to 2008. In the Northern Mariana Islands with an estimated population of 86,616, Internet penetration was a low 11.5% of the population and no users' growth was recorded during the eight-year period. In Palau, Internet penetration was 26.1% of the total population of 20,701.

For the Philippines alone, Internet penetration was only 21.5% of the population of 96 million, but users' growth was estimated at 932.5% from 2000 to 2008.

PLDT said in an earlier filing that the AAG project suffered delays in burying the submarine fiber-optic cable in Hong Kong due to "severe weather conditions." The AAG project had been expected to be fully operational by December 2008 to coincide with the retirement of the first-generation Asia Pacific Synchronous Digital Hierarchy cable systems like the APCN and Trans Pacific Cable systems.

"Nonetheless, the 37-kilometer [Hong Kong shore end in segment 2 [HK-Philippines] was completed and work is being done to complete the 61-kilometer shore end in segment 1 [HK-Branching unit4]," the telco said.

To fulfill its commitment to the project, PLDT had recently completed construction of a terminal station in La Union, north of Manila. In its May 29 filing, PLDT requested the NTC to grant it "permanent" authority to own, construct, maintain and operate the AAG, in keeping with the telco's franchise to build and operate a telephone network throughout the Philippines under the law, "or up to November 28, 2028, or in the alternative renew the same."

The AAG network is scheduled to be tested within the month of June. PLDT added, "The construction of the Philippine terminal station, as well as the other terminal stations comprising the AAG cable project, has been completed. All land cable installation works have likewise been completed. All submarine cable installation works are now progressing and expected to be complete by early June." Thereafter, the company said, "Traffic is expected to flow through the AAG cable network starting July/August 2009 timeframe."

The AAG is a consortium of phone companies including local carriers the government of Brunei Darussalam, as well as other foreign telcos which include Bharti Airtel Ltd. (India), CAT Telecom Public Co. Ltd. (Thailand), Communications Global Network Services Ltd. (U.K.), Pacific Communication Pte. Co. Ltd. (Cambodia ), PT Indosat Tbk (Indonesia), PT Telekomunikasi Indonesia, Tbk. (Indonesia), Saigon Postel Corp. (Vietnam), StarHub Ltd. (Singapore), Telecom New Zealand Ltd. (New Zealand), Telekom Malaysia Berhad (Malaysia), Telstra Corp. Ltd. (Australia), Vietnam Posts and Telecommunications Group (Vietnam), and Viettel Corp. (Vietnam).

When the agreement to build AAG was signed in April 2007, officials of the consortium said the cable system is designed to provide a bandwidth capacity of up to 1.92 Terabits per second of data but will commence with an initial capacity of 480 Gigabits per second. The gateway will use dense wavelength division multiplexing technology, which allows future transmission facilities projects to be upgraded to support faster Internet and e-commerce traffic.

Aside from the AAG project, PLDT is also involved in the proposed international undersea cable system called the Asia-Pacific Gateway. That project is to span 8,000 km (4,971 miles) and will link Malaysia, Singapore, Thailand, Vietnam, Hong Kong, the Philippines, Taiwan, mainland China, Japan and Korea. The APG cable system is scheduled to be fully operational by 2011, and like the AAG, will use the latest DWDM technology with a minimum design capacity of 4 terabits per second. MBJ

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